EUROPE

European investment reaches pre-2007 levels  

The levels of investment in Europe has finally reached levels seen prior to the financial crisis. This is almost five years after the US achieved the same, around 2014, as seen in the chart below. The investment growth rate is higher in Europe than last quarter at 2.3%, higher than GDP growth at 1.4%. 

Source: Financial Times

Germany’s Merck posts 10% earning slide after Forex loss 

Merck’s EBITDA fell to €3.8 billion, a 10.5% drop. The company attributed the slump mostly to Forex losses in various growth markets. Net sales were also weaker at €14.8 billion, down 2.2%.  

Source: Financial Times

Keep an eye on

  • Brexit
  • EU – China investment accord
  • Venezuela
  • Boeing 737 max 8’s fate

ASIA

China and Indonesia to suspend Boeing 737 Max 8 

All Boeing 737 Max 8 flights have been suspended by China and Indonesia following a second crash of the plane in less than 5 months. The most recent crash, which happened on March 10th, 2019 killed everyone, 157 people, on board. Noting similarities between the first crash involving the same plane in October 2018 wherein 189 people died and the most recent one, China suspended the operations of the aircraft. Boeing shares were trading at 9 per cent lower in pre-market trading, while the aerospace group’s depository receipts traded in Frankfurt 7.6 per cent lower. 

Source: Financial Times

HKEX and MSCI to open futures for China stock market 

MSCI and Hong Kong’s stock exchange (HKEX) have agreed to launch futures contracts on the A-share portion of the Emerging Markets index, in order to allow international investors to hedge risk from their exposure to Chinese equities. The news comes a week after MSCI decided to fast-track an increase in China’s weighting in its EM index — an influential benchmark tracked by $1.9 trillion of funds. The MSCI China A Index will comprise 421 mid and large-cap stocks listed in Shanghai and Shenzhen, and accessible through the stock connect programmes between the two mainland exchanges and the HKEX.

Source: Financial Times 

UK’s services employment falling at fastest pace in 7 years. 

AFRICA AND SOUTH AMERICA

Slowdown in South African economic growth  

South Africa’s GDP grew by 0.8% in 2018 with momentum slowing down in the 4th quarter. These levels are far low to tackle unemployment, which currently is at 27%. The country needs to grow at 5-6% for 20 years to bring unemployment back to 10%. The on-going crisis with Eskom has led to scheduled blackouts in recent weeks, further affecting the industries. 

Source: Financial Times

Argentina to hike rates 

Argentina’s Central Bank hiked interest rates to check the slide in the value of Pesos. It is the most interest rates had been raised in 6 months. The rates on the short term Leliq Notes were increased by 600 basis points to 57.89%. The Peso was under pressure in recent weeks on account of concerns over sluggish economic growth and the galloping inflation. 

Source : Financial Times

NORTH AMERICA

PEMEX Credit rating outlook chopped by S&P 

S&P reduced the outlook for PEMEX – aka Pétroleos Mexicanos – from stable to negative, citing government’s rescue plan as ‘insufficient’. The Mexican government stated that it released $5.5bn, through tax reductions, a capital injection and other savings. However, analysts believe these efforts constitute only half, if not a third, of what the company requires. The oil producer is battling to stabilize output after 15 years plummeting and despite a $107 billion debt, with a lot of repayments starting this year. 

Source: Financial Times

Mizuko takes a $6 billion restructuring hit

Written jointly by Sarah Mbiaba, Kaushik PSK, Sahil Bansal, Sophia Boucher, Leo Bouvier, Deepak Chathoth Narayanan, Kaline Larousse, Nisham Hussain M, Anirudh Parthasarathy and Tejwinder Randhawa.

Disclaimer: This newsletter contains information about Financial markets and college events. This information is not advice and should not be taken as such.